If neither of you lived there as a personal residence, there (although it would not be a "rental," because the HOA by-laws didn't allow it) I would still be considered a capital asset (a non-personal use) asset and you ca take the loss
Make sense? ... It doesn't have to be a rental to be an investment property ... Now, again, if this was your residence, then there would be a capital gain EXCLUSION if it were sold at a gain (but there would not be the ability to take a loss, is the other side of THAT coin)
Non-personal use = Capital gains tax on and gain on sale ... Personal residence = No capital gains tax, but no capital loss to take on sale
(Sorry for the typo ... let me try to say that more clearly)
Non-personal use asset = Capital gains tax on any gain upon sale AND capital loss can be taken if sold at a loss
Personal Use asset = Capital gains tax is excluded (up to $250,000 for single filers and $500,000 for those filing jointly) BUT no loss can be take if it is sold at a loss
I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)
Please let me know if you have any questions at all ...
OK, I'll move us now ... again, let me know of you have questions
Thanks. So to reiterate, the only person that ever lived there was my parent. Therefore, on Schedule D I would indicate the date acquired 9/2003 for $80K and it was sold in 12/2013 for $50K after expenses (there was a lawsuit over ownership of the parking space, as well as a decline in property value, some improvements, etc.). This would provide me a capital gain loss of $30K. Should I put an explanation in the tax return? I am leaning towards not doing so and if they contact me, then providing the back-up and documentation, which I definitely have.